VINING v MARDENS SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL MEAGHER, BEAZLEY and STEIN JJA 19 October 1998, 20 November 1998 [1998] NSWCA 250 APPEAL — statutory limitation period — appropriate period to be applied — whether cause of action founded on deed or in negligence — Limitation Act, s14(1)(b), s16 APPEAL — statutory limitation period — time at which loss is incurred APPEAL — statutory limitation period — whether application of limitation period should be determined as a preliminary issue — exception to the rule in Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514 The Appellant was advised by the respondents in family law proceedings, which advice the appellant later alleged in Supreme Court proceedings was negligently given. The respondents successfully moved the Supreme Court to summarily dismiss those proceedings as frivolous, vexatious or an abuse of power, on the basis that they were instituted outside the limitation period in s14(1)(b) of the Limitation Act 1969 (NSW). The appellant appealed from that dismissal on the grounds that: * because the advice related to a deed, the 12 year limitation period in s16 of the Limitation Act applied and the proceedings were filed within that period; * the judge erred in determining the time at which loss occurred; and * the respondents Limitation Act defence should not have been determined as a preliminary issue. HELD, dismissing the appeal: 1. Proceedings are not "a cause of action founded on a deed" for the purposes of s16 of the Limitation Act merely because the advice to which the proceedings relate concerned a deed. Therefore, the longer limitation period in s16 does not apply. The s14 limitation period of six years applies to actions founded on tort, including professional negligence. The applicant did not bring his action within this time. Any proposed amendment to allege misrepresentation would not have converted the claim to one founded on a deed. 2. If the appellant received negligent advice as to the entry into the deed and thereby suffered loss, the cause of action arose at the time the deed was approved by the Family Court, as it was then that his rights and obligations in the Family Court proceedings crystallised and could not be varied. 3. The appellant agreed to the preliminary determination of the limitation period defence and did not raise this issue in the Notice of Appeal. This case falls within the "clear" category of case referred to in Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514 in which the early determination of the issue is appropriate. Meagher JA I agree with Beazley JA. Beazley JA The appellant was a party to family law proceedings which were resolved by the Family Court of Australia approving a maintenance Deed pursuant to s87 of the Family Law Act 1975 (Cth). The Deed made provision for property settlement and spouse maintenance. The respondent was the appellant's solicitor in the family law proceedings and advised him in respect of the entry into and court approval of the Deed. 2 UNREPORTED JUDGMENTS The provisions of the Family Law Act are such that orders for spouse maintenance may be made, and if made may only be varied if special circumstances are shown. The parties can agree between themselves to opt out of their property and maintenance rights under the Family Law Act by entering into a Deed which is enforceable if, and only if, it is approved by the Family Court: s87 Family Law Act. The appellant and his former wife chose this course when they entered into the s87 Deed which was approved by the Family Court on 19 February 1986. The Deed provided for the payment of spouse maintenance until the wife either remarried or entered into a de facto relationship for a period in excess of 12 months (cl5). The appellant acknowledged in the Deed that he had been "independently advised by his... legal representatives of [his] respective rights under PtVIII of the Family Law Act and in respect of those financial matters the husband and the wife have reached agreement". PtVIII makes provision for property and maintenance orders. However, the appellant alleges that he was not advised that he had no entitlement to vary the spouse maintenance provisions of the Deed (except as provided in cl5). The appellant failed to make certain payments under the Deed and the wife consequently brought proceedings in the Family Court to enforce the maintenance provisions of the Deed. The appellant responded by bringing third party proceedings against the respondent alleging negligence for failure to advise him that the maintenance provisions of the Deed could not be varied except as expressly provided by the terms of the Deed. The appellant did not seek to have the Deed set aside or revoked. The third party proceedings were transferred to the Supreme Court. In the Supreme Court the respondents sought summary dismissal of the claim against them on the basis that the proceedings were frivolous or vexatious or an abuse of process (see Pt13 r5 of the Supreme Court Rules) on the ground that they were brought outside the relevant limitation period and were thus doomed to failure. The appellant supported the determination of the limitation question as a preliminary issue. The Master found the proceedings were commenced outside the limitation period (which he held was six years) and ordered summary dismissal of the claim. On appeal, that decision was upheld by Cohen J. This appeal is from the decision of Cohen J. Issues on the Appeal Four issues were argued on the appeal: (i) whether s16 of the Limitation Act 1969 (NSW) applied so that the relevant limitation period was twelve years not six years; (ii) whether the limitation defence should have been separately determined; (iii) whether the damage arose at the time the Deed was entered into; (iv) whether Forster v Outred & Co [1982] 1 WLR 86 ought to be applied. The first two issues can be disposed of briefly. Issues (iii) and (iv) are aspects of the same argument. Application of s16 of the Limitation Act The limitation period for a cause of action founded on tort (except motor vehicle personal injury cases) is six years: Limitation Act s14(1)(b). A cause of action founded on a Deed carries a limitation period of twelve years: Limitation Act s16. URJ VINING v MARDENS (Beazley JA) 3 Senior counsel for the appellant submitted that the Deed was integral to the cause of action pleaded against the respondent. He submitted that if the appellant was successful on the appeal, he would, upon the statement of claim being reinstated, seek to amend his pleading to allege a misrepresentation. The amended pleadings, if allowed, would allege that the statement in cl5 of the Deed carried with it the implied representation that the independent legal advice which he had been given was correct, whereas in fact it was incorrect. On the basis of that pleading, it was submitted, the twelve year limitation period would apply because the cause of action would be founded on the Deed, or would be a cause of action analogous to a cause of action founded on a Deed: see Lang v Le Boursicot 5 BPR 11,782. This submission must be rejected. The action as framed was for breach of duty for giving negligent advice. A six year limitation period applies to such an action. The fact that the advice related to the entry into and approval of a Deed does not convert the cause of action into a cause of action "founded on a Deed", nor one analogous to a cause of action founded on a Deed. An acceptance of the appellant's argument would involve construing the words "founded on" as "having something to do with", a proposition which barely needs stating to be rejected. For the same reason, an amendment of the pleading to include a claim for misrepresentation (either at common law or under s52) would not convert the case to one "founded on a Deed". Nothing in s16 justifies such a construction. Accordingly, this issue is determined against the appellant. Time Damage was Suffered Senior counsel for the appellant accepted that the two possible points of time when damage was suffered were either when the Deed was approved or when the wife's circumstances changed. He contended for the latter, as he had to, to succeed on the appeal. This issue may also be disposed of briefly for two simple reasons. First, the appellant's "damage" arose when the Deed was approved by the Family Court: as from that time he had no right to seek to vary it. He could suffer no further or greater damage. Secondly, prior to the hearing of the appeal it had never been argued that the change in the wife's circumstances was a triggering event. Nor was there any evidence to that effect. Rather, the case had always been conducted on the basis that the "triggering event" was the wife's application to enforce the Deed, due to the appellant's non-payment of maintenance. Separate Determination of the Limitation Defence Senior counsel for the appellant submitted that the availability of the limitation defence ought not to have been determined separately from the hearing of this action: see Wardley Australia Ltd v The State of Western Australia (1992) 175 CLR 514 at 533. There are three answers to this. First, the appellant agreed to the course taken. Secondly, this ground was not raised in the Notice of Appeal. Thirdly, the way the appellant put his case on appeal, the damage was suffered at one of two specific points of time, either at the time the Deed was approved or at the time the wife's circumstances changed. On this approach, there were no evidentiary matters which affected the determination of the time at which the cause of action arose. Therefore, this case fell into the "clear" category of case referred to in Wardley. Accordingly, the appellant fails on this issue. I should add that he was bound to 4 UNREPORTED JUDGMENTS fail on this issue in any event as, as has already been mentioned, the first time the appellant identified the change in the wife's circumstances as the time the cause of action accrued was during the course of the appeal. Having regard to the clear resolution of this issue, I do not consider it appropriate to enter into the juridical debate which surrounds the application of Forster v Outred. I propose that the appeal be dismissed with costs. Stein J I agree with Beazley JA. 1. Appeal dismissed. 2. Appellant to pay the respondents' costs of the appeal. Counsel for the appellant: E G Miller QC/M Errington Solicitors for the appellant: Redmond Partners Counsel for the respondent: P Greenwood SC/C Pinkerton Solicitors for the respondent: Phillips Fox